Neutral sphingomyelinase 2 (nSMase2) is an enzyme that generates the bioactive lipid ceramide at the plasma membrane in response to cell stress and has been implicated in a variety of important pathways and human diseases including apoptosis, cancer, inflammatory responses, neurological disorders, growth and development, and bone homeostasis. The long-term goal of this project is to understand in molecular detail the mechanisms regulating nSMase2 activity to aid in the development of novel nSMase2 target therapeutics. Although constitutively membrane-associated, nSMase2 displays low basal sphingomyelinase (SMase) activity and requires activation by anionic phospholipids (APLs). The domain architecture of nSMase2 comprises two domains: a hydrophobic N-terminal domain that tethers nSMase2 to the membrane and a soluble catalytic C-terminal domain. We have now determined the APL binding domain to localize exclusively to the N-terminal domain but do not understand how APL binding activates the soluble C-terminal domain. Preliminary data suggests inter-domain interactions mediate this process. In this proposal we will focus our investigation on the role of inter-domain interactions in nSMase2 regulation and address the following aims: 1) To delineate the inter-domain interface required for activation. We will use a modified membrane yeast two hybrid (MYTH) system to identify specific residues at the intramolecular interface. 2) To define the role of APLs in modulating inter-domain interactions. We will utilize the MYTH system in yeast cells lacking the major APL, phosphatidylserine, to probe inter-domain interactions in the absence of APLs. We will determine if APL binding promotes inter- domain interactions and if the intramolecular interface changes upon APL binding. 3) To characterize the basis for activation in molecular detail. We will determine binding affinities of N-terminal peptides to the catalytic domain and determine crystal structures of the catalytic domain alone and bound to N-terminal peptides. Taken together, these results should advance our understanding of nSMase2 regulation and facilitate the development of novel nSMase2 targeted therapeutics. Moreover, the development of the MYTH system will establish a system for high-throughput small-molecule screening of nSMase2 inhibitors. These studies are directly relevant to cancer and inflammation.